• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: What do declining corporate profits mean for U.S. equities?

The Ugly Reality Of Q1 Earnings - earnings cartoon 04.12.2016 

It's shaping up to be a nasty quarter for corporate profits.

In a note sent to subscribers earlier this morning, the Hedgeye Macro team provides some early insights on how earnings season is shaping up thus far: 

"It’s early in earnings season, but we got an early look at tough comps in commodity land (Monsanto and Agrium have both comped down double digits on top and bottom line). Alcoa fired 1,000 people globally in the process.

 

One of the key call-outs in our macro deck was that S&P 500 companies face tough comps for Q1 and Q2 (8 of 10 sectors comped higher in Q1 2015), with the flow through sparking the big question: with forward-looking earnings being taken down, what multiple will the market slap on declining forward looking expectations?"

 

For more, in the video below, Hedgeye CEO Keith McCullough explains why "we are vigilantly bearish on corporate earnings and junk bonds" while tearing down the latest permabull narrative that a weaker U.S. dollar will lead to “widespread earnings beats.”

What does it all mean investors?

If the ugly earnings picture holds, Q1 will be the third consecutive quarter of negative corporate profits. Look out below equity investors! Here's the must-see chart:

The Ugly Reality Of Q1 Earnings - EL profits